Incoterms for China Imports (2026): EXW vs FOB vs CIF vs DDP

Three letters on a supplier quotation decide who pays for the truck to the port, who clears Chinese export customs, who insures the container, who pays the duty and who eats the loss if a pallet goes over the side. Most first-time importers barely notice them, then spend the next year working out why the "cheap" quote cost more than the expensive one.

Incoterms are the international rules that define exactly where a seller's job ends and a buyer's begins. The current edition is Incoterms 2020, published by the International Chamber of Commerce, and it contains eleven terms. For anyone importing from China you realistically need to understand four of them.

Quick answer: EXW means you collect from the factory and handle everything including Chinese export clearance. FOB means the supplier delivers the goods loaded on the vessel with export clearance done, and you take it from there. CIF adds sea freight and minimum insurance to the destination port, though risk still passes at origin. DDP means the supplier delivers to your door with duty and clearance paid. FOB is the sensible default for bulk imports, DDP is the right answer for direct-to-consumer parcels, and EXW usually costs more than it looks.

The four terms at a glance

Two things in that table catch people out, so they are worth saying plainly.

Under CIF, risk transfers at origin even though the seller pays the freight. If the container is damaged mid-ocean, that is your problem, not theirs, and you are relying on insurance the seller bought to a minimum standard. Convenience and protection are not the same thing.

And EXW puts Chinese export clearance on you, the party least equipped to do it. That is the single most common reason an EXW deal turns into a mess.

Why FOB is the usual right answer

FOB is the most widely used term for China imports, and there are good reasons for that beyond habit.

It gives you a clean, comparable number. Every supplier quoting FOB Shenzhen is quoting the same scope, so you can put three quotes side by side and actually compare them. EXW quotes are not comparable to each other at all until you have priced the origin leg for each.

It puts each job with the party best placed to do it. The supplier arranges inland haulage and export clearance in their own country, in their own language, with brokers they already use. You arrange the freight and the import, where you have the relationships and the leverage.

And it gives you control of the freight, which is where the money is on a container. You choose the carrier, the routing and the destination agent. Our guide to air, sea and express from China covers how much that choice actually moves the number, and our own freight forwarding works this way for exactly that reason.

Why EXW usually costs more than it looks

An EXW price is lower on the invoice because origin costs have been stripped out of it. They have not disappeared. You will pay them, itemised, later:

• Inland haulage from the factory to the port
• Chinese export customs clearance and documentation
• Terminal handling charges at origin
• Origin agent fees

Add those back and EXW frequently lands above the FOB price for the same goods, with more paperwork and more ways to be delayed. It also means that if export clearance goes wrong, it is your problem in a jurisdiction where you have no standing.

EXW earns its place in one situation: you already have a forwarder or a partner in China who manages the origin leg on your behalf, in which case you are effectively recreating FOB with a provider you chose rather than one your supplier chose. That is a legitimate reason to use it. Wanting a lower number on the proforma invoice is not.

Where CIF quietly costs you

CIF is the term suppliers most like to offer, because it lets them book the freight. That is precisely the reason to be careful with it.

When your supplier chooses the carrier, they also choose the destination agent, and you have no relationship with that agent. Destination charges, documentation fees and container release fees then arrive from a company you have never dealt with, at rates you did not negotiate, at a point where your goods are already sitting in a port and your leverage is zero.

The insurance is the other soft spot. CIF requires the seller to buy minimum cover, which is considerably narrower than most importers imagine when they see the word "insurance" in the term. If you care about the cargo, arrange your own cover at a level you have actually read.

CIF is a reasonable choice for a first shipment when you have no forwarder relationship and want one less thing to organise. Most importers move to FOB by their third or fourth container.

Why DDP is the right answer for parcels

DDP is the outlier, and the reason it matters more in 2026 than it did a few years ago is duty.

For a direct-to-consumer parcel, DDP means the duty and the clearance are prepaid before the parcel ships. Your customer receives their order and pays nothing at the door. Under any other term, a courier can present your customer with a duty and handling bill, which reliably produces a refund request, a chargeback or a refusal, and occasionally all three.

That used to be a niche concern because low-value parcels often cleared free. It is not any more. US de minimis has ended, so commercial parcels into the United States are proper customs entries. The EU's low-value rules changed too, and other markets including Japan are moving the same way. Parcels that once slipped through now owe something, and somebody has to pay it before the box reaches the doorstep.

We have a full explainer on how DDP shipping from China works, including what the quote should contain and what to check before you accept one.

The flip side: DDP is usually the wrong term for a bulk container into your own warehouse. You are paying a third party to make classification and valuation decisions on your behalf, on goods you know better than they do, with your name on the entry. Own that yourself. Our notes on import duties, tariffs and landed cost cover what you are actually taking on.

Which term at which stage

There is no single correct Incoterm, only a right one for where you are.

Your first container. CIF or DDP if you have no forwarder and want the fewest moving parts. Accept that you are paying for simplicity.

Once you are shipping regularly. FOB, with your own forwarder. This is where most of the freight saving lives, and it is the point at which controlling the destination agent starts to matter.

Direct-to-consumer parcels, at any stage. DDP, always. The customer must never be billed at the door.

Direct into a marketplace. DDP or a properly structured FOB with your own broker, depending on whether you are shipping parcels or pallets. Our comparison of shipping direct to FBA versus staging first covers how that decision interacts with the term you pick.

Sourcing from several factories. FOB into a consolidation point, so you combine suppliers into one clean shipment and one customs entry rather than paying for several.

The thing Incoterms do not do

This matters and it is widely misunderstood, so it gets its own section.

Incoterms are a commercial agreement between a buyer and a seller. They are not a customs instrument. They allocate cost and risk between two private parties. They do not decide who is legally the importer in the destination country, they do not create or replace a customs bond, and no customs authority treats "we agreed DDP" as an answer to the question of who is responsible for the entry.

Commercial imports still need an importer of record, and in many countries a customs bond, typically a continuous bond if you ship regularly. Depending on how a DDP arrangement is structured, that may sit with you, with a broker, or with a third party acting on your behalf, and the differences are legally significant. Confirm the setup with a licensed customs broker in the destination country before your first shipment. That responsibility is yours as the seller, and it is not something a fulfilment warehouse takes on for you.

The same boundary applies to product certification: the Incoterm says nothing about whether your goods are legally allowed into the market.

The bottom line

Buy FOB for bulk once you have a forwarder, because that is where the freight control and the comparable pricing live. Ship DDP for anything going to an end customer, because a duty bill at the door costs you the sale and the customer. Treat EXW as FOB with extra steps unless you have someone in China running the origin leg for you, and treat CIF as a convenience you are paying for rather than a saving. Above all, remember that the three letters settle the commercial deal and nothing else: your importer of record, your customs bond and your product compliance still sit with you. Tell us your products, volumes and destinations and we'll tell you which term actually fits.